Get credit for watching this video. Start your streak.
How to Fix Social Security
Will there be $1,000,000 waiting for you when you retire? Not if you’re relying on Social Security, which is barely on life support. Can we mend this broken government program, or do we need an entirely new approach, call it a retirement revolution? Economist Stephen Moore has some ideas.
Topics
Hosted By
Stephen MooreINT. COFFEE SHOP - DAY
Steve sits down next to a young man with a thick mop of wavy brown hair, scrolling through his cell phone.
STEVE
I want to talk to you about your future.
YOUNG MAN
What future? Haven't you heard the world is going to burn up in ten years. Or maybe it's twenty.
STEVE
You don't really believe that, do you?
YOUNG MAN
No. Not really.
STEVE
I didn't think so.
YOUNG MAN
So what about this future that I might have.
STEVE
What if I told you that when you're ready to retire, let's say at age 65, there would be a million dollars waiting for you... Maybe a lot more.
YOUNG MAN
When I'm 65? How about a million dollars now?
STEVE
Sorry. I can't help you with that.
YOUNG MAN
Too bad. My car insurance premium has gone through the roof. How about half a million?
Steve smiles.
YOUNG MAN (CONT'D)
Alright, so what are you selling —lottery tickets?
STEVE
No. I'm not selling anything. I want to fix a broken program in Washington.
YOUNG MAN
Which one?
STEVE
Social Security.
YOUNG MAN
Social Security? Isn't that going bankrupt?
STEVE
Well, let's put it this way, it's not in great shape. That's why we need to talk about it.
YOUNG MAN
Alright, I'm all ears.
STEVE
Do you know how Social Security is financed?
YOUNG MAN
They take money out of my paycheck, right?
STEVE
It's called a payroll tax. It's the biggest tax you pay.
YOUNG MAN
Yeah, I've noticed.
STEVE
You pay and your employer also pays on your behalf, but it all comes out of your paycheck.
YOUNG MAN
And I get all that money back when I reach 65. Except it's going broke, so I probably won't get anything.
STEVE
I wouldn't go that far. You'll get something, but Social Security is running out of money. That's not just me saying it. The government admits it.
Steve hands his cell phone to the Young Man. The headline reads: Social Security to Run Short of Money by 2035.
STEVE
You're literally paying for my social security, but who's going to pay for yours? Anyway you slice it, it's not a very good investment of your money.
YOUNG MAN
I'm getting ripped off.
STEVE
Exactly. The rate of return you're getting from the government is very low, almost non-existent. And, as we've already discussed, the money might not be there when you retire.
YOUNG MAN
So, what's your idea?
STEVE
Rather than putting your money into a Social Security fund, which is controlled by politicians, what if you could deposit that money into an account assigned to you and you alone. No politician could get his greedy hands on it. You would gain access to your money when you reach sixty-five.
YOUNG MAN
How is your plan better?
STEVE
Glad you asked about that. I want to introduce you to what Albert Einstein called the greatest force in the universe.
YOUNG MAN
E=MC Squared?
STEVE
Compound interest.
YOUNG MAN
Never heard of it.
STEVE
As you add money to your account paycheck after paycheck, it grows exponentially — slowly at first and then faster and faster over time. The younger you start, the better.
STEVE
It's truly amazing how it works. At an annual rate of return of 6%, a $5000 a year investment will turn into a million dollars in less than 40 years.
YOUNG MAN
Cool. What am I investing in?
STEVE
This is the best part. Under this new plan, you'd invest in an index of all the stocks on the American stock exchanges. I call it the Invest in America plan.
YOUNG MAN
What's an index fund?
STEVE
It's essentially a big basket of all major stocks. In this case, a very big basket. As the stock market rises, your account grows.
YOUNG MAN
Isn't investing in stocks risky?
STEVE
Investing in individual stocks can be, yes. But here you'd be investing in thousands of stocks — from Walmart to Fedex to Google. The risk is spread out. What you'd really be doing is investing in the American economy. And, historically, that's been a very good bet.
YOUNG MAN
How good?
STEVE
Let's put it this way: on average the stock market doubles about every seven years. That leaves Social Security in the dust. If we'd adopted this program forty years ago, instead of getting an average monthly benefit of $1800, retirees who had worked full time would now be getting 8 to $10,000 a month.
YOUNG MAN
$1800 a month. Who can live off that? I'd have to give up Starbucks.
STEVE
And, remember, your Invest in America account would have your name on it. It would belong to you and not the government.
YOUNG MAN
I like that idea. I don't trust politicians on either side.
STEVE
And, here's the topper, since you're investing money in the American economy, you'd be helping the economy grow, providing fresh capital for businesses to expand and create new jobs. And, again, as the economy grows, your account grows. This is a win-win for everybody. Right now, most low-income workers and minorities don't own any stocks. If this program were adopted, they would. Every American would have a stake in America and a safety net when they retire.
YOUNG MAN
I'm liking this more and more.
STEVE
I thought you might.
YOUNG MAN
So, how do I sign up for this program?
STEVE
Ah, that's the problem. It doesn't exist... yet.
YOUNG MAN
Well, let's do it.
STEVE
If anyone is going to do it, it's going to be your generation.
YOUNG MAN
How do we make it happen?
STEVE
Start a movement. Start a revolution.
STEVE
Spread the word that there's a better way. Tweet about it. Tell your friends. Your co-workers.
YOUNG MAN
Yeah! We need to go viral.
STEVE
It's your money. Invest it in America rather than relying on the government.
YOUNG MAN
It's a scam. A big grift.
Steve looks into his coffee cup. It's drained.
STEVE
Don't wait. Every day that goes by means that more of your hard earned money is going down the Washington drain never to be seen again.
Steve looks up. The small table is now surrounded by a group young coffee-drinkers.
YOUNG COFFEE DRINKER
Sign me up.
#YCD2
I always thought it was a grift.
YCD 3
What was that about a million dollars?
We pull back further and see now that there's a large crowd
surrounding the table... and then even further, a crowd
gathering outside the coffee shop.
FADE OUT:
